The cryptocurrency market continues to be primarily influenced by broader macroeconomic conditions, with the latest US Consumer Price Index (CPI) report providing a glimmer of optimism for risk assets, including cryptocurrencies.
Cryptocurrencies await Federal Reserve decision
According to a recent report from Coinbase reportThe slightly weaker-than-expected July CPI of 2.9% year-on-year (the lowest level in three years) has “calmed market concerns and reinforced expectations of imminent Fed rate cuts at the Federal Open Market Committee (FOMC) on September 17-18.”
According to the report, this has been seen as positive news for risk sentiment as it may help allay fears of a potential US recession, which Coinbase believes is more important than the overall size of the Fed cuts this year.
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However, the cryptocurrency market has remained range-bound, with bitcoin (btc) failed to break above the $61,000 level. Sentiment has slowed due to a lack of crypto-specific catalysts, and btc perpetual futures funding rates have turned negative this week, potentially signaling lower trader activity.
In the ethereum (eth) ecosystem, gas prices have plummeted, which could indicate a decline in network activity. On a more positive note, US ethereum spot ETFs have seen inflows this week.
ETF inflows indicate strong institutional interest
The report also highlighted the growing institutional adoption of cryptocurrencies, as evidenced by the latest 13-F filings for US spot bitcoin ETFs. The data, which captures the state of institutional ownership as of June 30, 2024, reveals notable new holders such as Goldman Sachs ($412 million) and Morgan Stanley ($188 million).
The ETF complex recorded net gains entries $2.4 billion during this period, despite a drop in total assets under management (AUM) from $59.3 billion to $51.8 billion, due to the drop in the price of bitcoin from $70,700 to $60,300.
However, Coinbase analysts believe that continued ETF inflows during bitcoin's underperformance may be a “promising indicator of sustained interest in crypto from the new pools of capital that ETFs provide access to.”
They also expect the proportion of investment adviser holdings to increase as more stockbrokers complete their due diligence on these funds.
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Looking ahead, the report notes that the stage is set for market dynamics to be tested at the upcoming Jackson Hole Economic Symposium, a pivotal event that could influence sentiment and shape the trajectory of cryptocurrency markets.
While short-term fluctuations and market slowdown While this may dampen immediate enthusiasm, Coinbase highlights the underlying currents of institutional interest and the changing landscape of ETF inflows that paint a promising picture for cryptocurrency prices for the remainder of the year.
At the time of writing, btc is trading at $59,679, reclaiming the top of the range seen in recent days between $57,000 and $60,000.
Featured image of DALL-E, chart from TradingView.com
